Koch Brothers Sue Widow of Cato Chairman Emeritus Over Stock

March 1 (Bloomberg) -- Billionaire brothers Charles G.
Koch, co-founder of the Cato Institute, and David H. Koch sued
the free-market advocacy group, and the widow of Chairman
Emeritus William Niskanen seeking control of his shares.

Niskanen’s October death triggered an obligation for his
wife and estate representative, Kathryn Washburn, to offer his
shares to the institute and, if it declined to buy them, then to
the surviving shareholders, according to a copy of the complaint
obtained by Bloomberg News.

Cato President Edward H. Crane, a defendant, responded by
calling the case a “hostile takeover” attempt by the Koch
brothers to advance their political agenda, an allegation
Charles Koch later denied.

“Almost four months after Niskanen’s death, defendant
Washburn has not offered to sell the Niskanen shares to the
corporation,” in accordance with the shareholders’ agreement,
the brothers allege in the complaint.

The Washington-based organization has been a supporter of
litigation challenging President Barack Obama’s 2010 health-care
reform legislation. The Koch brothers, principals of the closely
held refining and chemical company Koch Industries Inc., have
been active in Republican Party fundraising. The company
headquarters is in Wichita, Kansas.

The filing of the complaint couldn’t be immediately
confirmed in a search of online records at the Johnson County,
Kansas, District Court in Olathe, about 22 miles southwest of
Kansas City, Missouri.

$1 a Share

Niskanen died at age 78, according a statement on the
institute’s website. He led President Ronald Reagan’s Council of
Economic Advisers, and was director of economics at Ford Motor
Co. and a defense analyst at the Rand Corp.

He acquired 16 shares of Cato stock for $1 a share,
according to the complaint.

The brothers seek a court order compelling Washburn to
offer her late husband’s shares to Cato and declaring that if
the organization declines to buy them, that the right passes to
the surviving three shareholders, the Koches and Crane.

In an e-mailed statement to Bloomberg News, Crane said he
and Cato see the case as a attempted “hostile takeover” of the
organization that he and Charles Koch co-founded in 1977.

“Mr. Koch’s actions represent an effort to transform Cato
from an independent, nonpartisan research organization into a
political entity that might better support his partisan
agenda,” Crane said.

Koch Denied Allegations

Charles Koch denied those allegations in his own e-mailed
statement.

“We support Cato and its work,” he said.“We are not
acting in a partisan manner, we seek no ‘takeover’ and this is
not a hostile action.”

Koch said he and his brother were seeking to hold everyone
to the shareholders’ agreement and ensure that the institute
“stay true to its fundamental principles of individual liberty,
free markets and peace.”

Washburn couldn’t immediately be located for comment.

The case is Koch v. Washburn, 12-cv-01749, Johnson County
District Court, 10th Judicial District (Olathe).